Matter over Mind: the Importance of Execution

During the spring semester of my junior year at NYU, I took an entrepreneurship class taught by NYC venture capitalist Larry Lenihan. Among many ideas which stuck with me, a specific point he made about the quality of your idea versus your execution continues to resonate with me. He laid out the following:

Business Success = Idea x Execution

Idea / Execution:

Terrible= -1 / $1

Weak= 1 / $1,000

Average= 5 / $10,000

Good= 10 / $100,000

Great= 15 / $1,000,000

Brilliant= 20 / $10,000,000

So, for instance, an average idea executed brilliantly can create a business worth $50,000,000.  

This insight has several (intuitive) implications. The most obvious, and maybe most important as an aspiring entrepreneur, is that your idea matters much less than your execution. This means that you don’t need to be a genius, or have a one in a million epiphany and come up with the next personal computer, or even be an expert in the field your idea may be in. Do you think Jeff Bezos was the only person to come up with the idea of an online retailer, or that Pierre Omidyar was the only person to think of an online auction site?  Although these entrepreneurs are certainly intelligent, their ideas were fairly simple. They executed flawlessly, though.

While these data points suggest that you don’t need to sit still until you come up with the next disruptive technology, it also suggests that if you have even just an amazing idea, you need to be incredibly ambitious and hungry. You need to get a prototype up and running, you must iterate it to no end, you must create an organization dedicated to putting the best product out there and keeping the customer happy, you must be focused on creating a defensible position and brand within your industry, and you must concentrate on developing a sustainable and growing revenue stream. Simply put, you must be focused on execution.

This is what makes entrepreneurship so difficult. There is a certain romantic air around starting a company in a garage, inventing the next big thing and changing the world. What people seem to have lost focus of is that at the end of the day, creating a viable business and creating real wealth is what entrepreneurship is about. Because there are so many people thinking of the next idea which can attract a million eyeballs and so few barriers to entry, entering the world of entrepreneurship with only a decent idea may seem harder than it is. And because so many companies which have yet to prove themselves sustainable businesses which can create long-term wealth have been celebrated, making a start-up into a large, successful company seems easier than it is.

While net-net these realizations do not make starting a successful new company seem any easier to you, the calculus for how you get there should certainly seem different than what is popularly perceived. Realizing what is important for true entrepreneurial success should help you on your way to building the next Google (or Walmart!).